Low bankruptcy numbers continue

The downward trend of bankruptcy filings looks like it will continue right to the end of 2006, according to numbers from U.S. Bankruptcy Court in Albany.

As of this morning, a total of 3,525 cases had been filed for the year, compared to 10,427 in 2005 and 8,228 in 2004. (Additional filings could come before day’s end, and electronic filings can continue through the weekend.)

Last year, Congress — trying to curb what it saw as abuses by debtors — made it more difficult to take refuge in Chapter 7, the most common form of bankruptcy in which a person or business liquidates assets and starts again.

Numbers, at least in the Albany court, do show a more significant drop in Chapter 7s than Chapter 13s. There were 2,238 Chapter 7 filings in 2006, compared to 7,839 in 2005. Chapter 13 filings totaled 1,254 in 2006, compared to 2,557 in 2005.

The changes, which went into effect in October last year, caused a 30 percent spike in filings. Bankruptcies nationwide topped 2 million for the first time that year, according to the American Bankruptcy Institute in Washington, D.C., but then dropped accordingly after the new rules went into effect.

Many lawyers say the new rules make it harder and more expensive to file, and expect the numbers to rise in the next few years.